Don’t fall into tax cuts trap

Don’t fall into tax cuts trap

The Australian Taxation Office has fielded more than 90,000 phone calls from "excited" taxpayers and been forced to draft in extra staff to cope with demand following the passing of tax cuts on Thursday.

A spokesman for the agency said the call centre has been flooded with inquiries and it is ready to update systems once the bill receives royal assent.

"We have seen a large number of people getting excited about tax time, and our call centre is managing a large number of calls about Single Touch Payroll, myTax or linking our online services to myGov," noted the ATO.

"For example, we received over 90,000 calls yesterday to our call centres."

How soon individuals receive their refund will depend on when tax returns are lodged, however the ATO has warned in the past not to lodge too early as the necessary information from banks and health funds may not be available.

"Most employers have until July 31 to finalise their employees' income statements so, we strongly encourage taxpayers to wait a few weeks before lodging their tax return," Assistant commissioner Karen Foat previously told the ABC, saying it is better to wait until August.

"If you lodge your tax return before your income statement is tax ready, your employer might make changes, and you may need to lodge an amendment. In some cases, additional tax and interest may be payable."

Under the changes, low and middle-income earners will pocket more than $1000 after the Morrison government passed its full package of tax cuts.

Prime Minister Scott Morrison hailed the government's victory as a win for Australians.

"These are the people we will keep our faith with every single day," he told reporters in Canberra.

"I said we would burn for them and that is exactly what we've been doing this week."

The ATO has been inundated with inquiries.

The first stage of the plan will deliver up to $1080 to low and middle-income earners when they lodge their tax returns in coming months.

The second stage will top up a low-income tax offset, which means more people - earning up to $45,000 instead of $41,000 - will get a 19 per cent tax rate. The final stage flattens the tax rate from 32.5 per cent to 30 per cent for people earning between $45,000 and $200,000 from mid-2024.

"Our plan was independently verified by the secretaries of finance and treasury at the election. It doesn't get any more certain than that," the prime minister said.

Labor unsuccessfully tried to scrap the third stage and bring the second stage forward before voting for the bill, which cleared the upper house 56 votes to nine.

Treasurer Josh Frydenberg speaks to Australia's parliament in Canberra on Thursday. Fryenberg said tax cuts passed by the Senate would be delivered and the government would achieve Australia’s first annual budget surplus in the current fiscal years in more than a decade without reducing government spending. (AP Photo/Rod McGuirk)

The opposition will review its position on the final stage closer to the next election.

"What Labor has done is take a principled stand in the national economic interest," Mr Albanese told reporters on Friday.

"The fact is the economy is flatlining at the moment.

"What we did this week was always support, as we did during the election campaign, stage one of the tax cuts. We always supported that. That's the only thing that will happen." Tasmanian independent Jacqui Lambie lobbied for her state's $157 million public housing debt to be erased or renegotiated in return for her support. Chief negotiator and Finance Minister Mathias Cormann told parliament he would work through the issue over the next six to eight weeks, but stopped short of any commitment to wipe the debt.

Centre Alliance initially boasted about securing a deal which would lower gas prices, before being forced to admit the guarantee amounted to a "draft policy". Senator Cormann indicated he would continue to look at measures around gas, although he rejected suggestions of a "special deal" with the minor party.

Greens Leader Richard Di Natale attacked the crossbench and Labor for supporting the tax cuts, saying it was a "very dark day in Australian politics". He accused Senator Lambie for caving into big business, while saying Centre Alliance may as well join the Liberal party and "stand for nothing".

"But what a capitulation from the Labor Party," he told reporters in Canberra. "We have got the Labor Party becoming the Liberal Party-lite." Instead, the Greens want to see a boost to productivity through investment in infrastructure and education, while modernising the nation's energy and transport networks.